MMS714: Sport Organisation Behaviour - Power and Politics in Organizations Case Study Assessment Answer

Internal Code: 1AHJDD Code: MMS714

Sport Organisation Behaviour Assessment Answer

Assignment Task: MMS714 James Park has been hired as the new CEO by the board of directors of GoSports Inc., a large national sporting goods retailer, which has been battling economic and internal issues over the previous years. Despite Park’s experience at the helm of large companies in need of profound strategic and structural change, in his new position at GoSports he has been “butting heads” with a powerful collective of executives unhappy with the hire and threatened by the new CEO’s accolades. To complicate matters, rumor has it that the decision to hire Park was far from unanimous, with various factions vying for control in the company, waiting for a chance to fill the power vacuum a quick departure by Park would leave behind. After two weeks with the company, Park is called before the board of directors to report on the progress made and how he plans to return GoSports to its former glory. MMS714 Two weeks ago, James Park was hired as CEO of GoSports Inc., a major retailer for sporting goods and apparel in North America, operating over 300 stores in all 48 contiguous states. His task was to revitalize the company’s culture and breathe new life into the firm’s stagnant operations. However, soon after he started his new job in high spirits, Park realized that a handful of longtime executives were unhappy with his hire and, apparently threatened by the new CEO’s accolades, resisted every idea for change. Additionally, various department heads believed that strengthening their respective divisions was the preferred way for turning around the company; some even actively attempted to subvert Park’s revitalization efforts by withholding information, lobbying against him, and instructing their subordinates to “keep doing what we have always done.” MMS714 Park knew he was under close scrutiny to show results, as the board of directors had made it clear that they expected him to live up to his reputation – and the generous signing bonus. To complicate matters, rumor had it that the decision to hire Park had been far from unanimous. In fact, various factions inside GoSports (including some inside the board of directors) were vying for control in the company, hoping Park would not last long. MMS714 GoSports Inc. and The Sporting Good Retail Industry - MMS714 GoSports Inc. was founded in 1973 and quickly grew from a small neighborhood store to a national chain. Headquartered in Philadelphia, PA, the Fortune 500 corporation provided customers with equipment for any sport, ranging from weight training to fishing. With this diverse product range came increased pressure to maintain a lean operation, and at the same time be able to meet consumer demand at the lowest inventory possible. After the original founder, Edward Sutton, had passed away, his three children took over the company. The oldest, Michael, and youngest, Jeannie, were members of the board, whereas the middle sister, Sarah, was director of finance. Most executives and high-ranking managers had been with the company for a long time and worked their way up from the inside (figure 1). In fact, most of them were from the greater Philadelphia area and had started as seasonal employees during high school. GoSports valued consistency and familiarity and most of the senior management shared personal interests and hobbies. At the same time, management at GoSports largely ruled by authority, emphasis on hierarchy, and favoritism. To complicate matters, there had been repeated disagreements over the years regarding the strategic direction of the company, with varying coalitions attempting to steer GoSports in one direction or another. These battles for internal control had not gone unnoticed, and mid- and low-level management had grown increasingly wary of being caught in the upper echelon’s power plays. MMS714 Over the past few years, GoSports had experienced a substantial decline in sales and revenue. Although part of these losses could be attributed to the overall shift toward online retailing, which favored smaller, specialized operations with less overhead, the downturn was in large part due to a series of missed opportunities and slow reactions to changing market conditions. GoSports’ management had proven unable to react to decreased foot traffic at physical stores and changing consumer preferences. Persistent disagreements and personal issues stymied effective decision making at the company. Competitors had seized on GoSports’ inability to evolve and had managed to capture significant market share. MMS714 As numbers continued to deteriorate, the majority of the board of directors decided the company would benefit from an outside executive to revitalize the former industry leader and had pushed for the hire of Park. While shareholders and employees welcomed the bold move, it was unusual for GoSports to forsake its long-standing tradition of filling upper executive positions solely from within (Figure 1). James Park - MMS714 Charming and charismatic, with a certain penchant for flashiness, Park was well known in the industry for his ability to develop long-lasting relationships, spot trends, and quickly exploit opportunities. Born and raised in San Francisco, he attended Stanford University and launched his own sports and event management company in Los Angeles during his senior year of college. He eventually sold it to his partners after they had been able to establish the company as one of the most innovative and well-managed firms in the industry. His success in the highly competitive entertainment capital of the world made him a premier target for corporate headhunters and he eventually moved into a mid-level executive position with one of North America’s largest sporting goods manufacturers. During his ensuing 17-year tenure, Park quickly rose through the ranks and was integral in revitalizing the company, turning it into a multi-billion dollar business. MMS714 During that time, Park spent several years working in Europe and Asia, where he still maintained many connections. Park possessed an astute ability to understand people’s needs and desires and to gather support for his ideas and was known to quickly deal with those trying to stymie his efforts to guide his companies in a better direction. While lower and mid-level management often admired him for his approachable demeanor and honesty, fellow high-level executives had in public referred to him as a “shark” after Park had successfully pushed for organizational change against their will. At GoSports, the 45-year old Park, replaced 67-year old H. Grimm, who had been with the company for close to 35 years. The younger employees at GoSports welcomed the addition of Park, as many felt that over the years, seniority and personal connections had taken precedence over hard work, creativity, and merit. Many were excited about the fresh blood and the new vision Park brought with him. The First Day - MMS714 On his first day in the office, Park made it a point to walk around, shake hands, and to get to know employees of all ranks. Immediately, people noticed how different his warm and approachable presence was from Park’s predecessor and the cabal of current upper management. One of GoSports’ key account managers later commented, “You can tell he has been around the block a few times. His entire demeanor is different; he knows what he is talking about. I think he will be great for us, especially with all of his international experience.” After speaking with a group of executive assistants, one of them was particularly impressed by Park’s personable nature. She said, “What a charming guy! He seemed genuinely interested in what people had to say. When I ran into him a little later in the day, he even remembered my name.” Park even took the time to comment on one of the technology managers’ wall art. “I have had that Phillies mural for years now and none of the other managers has ever said anything. We chatted about baseball for a couple of minutes; he seems like a great guy.” MMS714 Later that day, Park gave a speech at a “town hall” meeting, the first in company history. Park planned on making these meetings a regular staple of corporate communication and employee involvement, just like he had done at his previous employer. His speech was emphatic, passionate, and left an instant impression with most of the employees. It is an incredible honor to be here today to address you, my team, as your new CEO. First, I would like to thank the board of directors for putting their trust in me and for the opportunity to be part of a great organization. I would also like to thank all of you for the warm welcome you have given me this morning. I already have had the chance to speak to many of you and I hope that I will be able to meet everybody over the next couple of weeks. Today marks the beginning of a new era here at GoSports and I would like all of you to be a vital part of the process, for without you there are no GoSports and without your contribution, we cannot succeed. It is my first day at work and I want nothing more than to get started, so let me keep this brief. GoSports faces a great number of challenges. But with those challenges come opportunities, opportunities we will seize to our fullest advantage. You already have an experienced management team that has been weathering the storm with you and now it is time to take matters back in our own hands, assume responsibility for our actions, and take GoSports back to where it belongs, the top. I pledge that I will always be available to every single one of you for your concerns, ideas, and feedback. We will broaden our channels of communication and encourage your creativity and your input. Later today, I will meet with your management team to plan our next steps. You will be kept informed during all stages of the process and your concerns will be taken into account. You are the power behind the changes we will have to make and I look forward to walking this path with you. MMS714 Park felt elated after that brief speech. He could tell that people liked what they had heard. During the speech, he had noticed several people nodding their head approvingly and a couple of employees approached him afterward expressing their personal welcome. GoSports’ employees appeared to take a lot of ownership of their company and their work. Park hoped to turn their attachment into a willingness to make personal sacrifices for the company. MMS714 Unfortunately, things turned for the worse later that day when Park met with the rest of the executives. Among them were Luc Livingston, director of Operations at GoSports and heir apparent to the throne before the board had decided on Park as the new CEO; Betty Carson, director of Corporate Partnerships and Development; and Robert Harkin, director of Marketing. Also present was Director of Finance Sarah Sutton, as well as Michael and Jeannie Sutton. Park was scheduled to meet with the remaining board members the following week. While the majority of the employees and mid-level managers had given Park a warm welcome, the atmosphere at the executive meeting was frosty. Livingston opened the discussion by remarking sarcastically, “That was quite the speech you gave there. You better have a good secretary, now that you gave everybody permission to talk to you at all times of the day. People better still work and not spend their hours running to you with ludicrous suggestions.” During the meeting, although never openly questioning Park’s suitability to run GoSports, Livingston had remained distant and dismissive, almost abrasive. Despite Park’s attempts to keep the conversation upbeat and professional, the director of Operations appeared to harbor ill will, making petty attempts to show how much more he deserved Park’s job. MMS714 At one point during the meeting he remarked, “Why don’t you let us fill you in about how things are done here at GoSports? MMS714 I am sure you had your way of running a business in your previous position, just like we do here. After all, most of us have been here for a long time. Well, except Sarah, she is still learning, too.” Park, not willing to muddy the waters on his very first day, politely replied by quickly covering some of his past work and then swiftly steering the conversation toward GoSports and the challenges ahead. He sensed that little would come out of having a group meeting, which Livingston would undoubtedly attempt to dominate, and suggested to meet with the other executives and board members individually. Meeting with Luc Livingston - MMS714 Luc Livingston, director of Operations, had started out at GoSports as a seasonal employee during high school and interned at the company’s headquarters during summers while attending the University of Pennsylvania in Philadelphia. He had joined GoSports after graduating with highest honors and had quickly put his mark on the company’s operations. While he could be amicable when things were going well, he was known to have a short temper when waters were rough. He was incredibly skilled at navigating office politics, which enabled him to strike up beneficial relationships with a number of high-ranking executives early in his career. Under the tutelage of Howard Grimm and the protection of Michael Sutton, Livingston had been groomed to succeed Grimm whenever the time was right. He was extremely hungry for power and he had been enraged when he found out that he had been passed over for the job of CEO. He vowed to show everybody that the board had been pushed to make the wrong decision. He was planning to play along with the hiring of Park, but had already begun thinking about ways to ensure the new CEO’s quick failure. Unbeknownst to Michael Sutton, Livingston ultimately desired to be chairman of the board and viewed the CEO spot merely as a stepping stone to that position. MMS714 As Park had expected, Livingston provided little to no constructive information during their meeting. However, he was not foolish enough to blatantly question Park’s authority or overtly express his anger about not being chosen by the board to become the new CEO. Rather, he spent most of the time touting the achievements of his department, highlighting his own role in previous successes, and his long history with GoSports: You see, James, I have been here a long time and I have been fortunate to work with a number of great people. But let me tell you, I have also seen people fail quickly because they didn’t understand our culture. We are a big family here and many of us have started from the very bottom and earned our way up. That kind of dedication and commitment is what has made us so successful and it will be key in our continued success. For example, when I started here all those years ago, we didn’t know the first thing about operations and how to run a company. Now, well, I built that success. GoSports needs someone in charge like that; someone who understands its strengths and weaknesses, someone who understands what it’ll take to focus on the right parts of the equation. Meeting the Other Executives - MMS714 Over the course of the next week, Park also met with the other executives and was able to gather valuable information about the company and its culture. He learned about the icy relationship between Livingston and Harkin—the former jealous of the other’s creativity and personal relationships with his peers, and the latter increasingly frustrated with having to work with someone who did not seem to put the company’s well-being before his own personal agenda. Park further noted a great deal of frustration among some of the other executives who did not form part of the inner circle. The Present Day - MMS714 Today, two weeks after being named CEO of GoSports, Park had been summoned to report to the board of directors his plans to turn the company around. He knew what he had to do in order to take GoSports not only back to its former place atop the industry, but also to unknown spheres yet untapped. He had formulated a strategy that involved the participation of key members of the executive team, as well as widespread support from mid- and lower level employees. He knew it would not be easy. His pitch to the board had to be perfect, his arguments sound, and his rhetoric convincing. He straightened his tie, grabbed his notes, and headed into the meeting.

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